[Click eStock] "DGB Financial, Limited Impact from COVID-19... Target Price Up 11%"

[Asia Economy Reporter Park Jihwan] Kiwoom Securities on the 21st revised its investment opinion on DGB Financial Group to 'Buy' and raised the target price by 10.7% from the previous 7,500 KRW to 8,300 KRW, stating that the impact of the novel coronavirus infection (COVID-19) is limited contrary to concerns.

Seoyoungsoo, a researcher at Kiwoom Securities, analyzed, "There were concerns about the deterioration of the Southeast region's economy, which has a high proportion of manufacturing, due to the prolonged impact of COVID-19. However, it is judged that the risk has significantly decreased as the government has borne market risks through loans from the Korea Credit Guarantee Fund and the Industrial Bank of Korea."

He predicted that excessive concerns could create new investment opportunities, making it a stock worth paying attention to. Even reflecting all concerns, the current stock price level is considered too cheap.

Researcher Seoyoungsoo explained, "The third-quarter earnings are expected to record stable profits contrary to market concerns. The stock prices of regional bank holding companies have continued to weaken due to concerns that the manufacturing-centered local economy might experience a prolonged recession after the COVID crisis."

However, market concerns turned out to be excessive. Researcher Seo said, "As a result of reviewing the third-quarter earnings, it is expected to achieve relatively good results in the third quarter as well as in the second quarter, contrary to market concerns," and "despite market worries, the loan loss cost ratio is maintaining a stable level, and the ongoing downward trend in margins is somewhat settling, with an expected reversal to an upward trend from the fourth quarter."

Additionally, "It is expected that the non-bank sectors such as securities and capital will continue to show good performance for the time being, he said, emphasizing, "The main factors are the strong performance in the IB sector and increased retail revenue due to the improved stock market environment."

Researcher Seo added, "The valuation is absolutely undervalued, and even conservatively, it is judged that maintaining dividends close to last year's level is possible."